Inflation, Your Business And How To Deal With The Upcoming Pressure.

Understanding how and preparing your business for the impact of inflation is a critical element of business planning that now more than ever needs to be addressed.

Interest rates rising are putting a strain on businesses across the country, as the costs for running these businesses rise in turn. Further spikes in inflation could provide additional challenges for businesses and their owners who are struggling to prepare for them.

With interest rates forecast to increase exponentially over the next year, here are some methods you can employ to address the risk inflation may pose to you.

Improve Productivity And Efficiency

Now is the time to review processes and output and look at ways to improve or streamline your operations, such as automation of processes including business software.

This could include

  • Emails
  • Invoices
  • Shipping
  • Sales and marketing or
  • Purchase orders

Strategically Cutting Costs

Review your current service providers and contracts such as telecommunications and internet providers, commercial property leases and service contracts, and compare the current market. You may find that there are better deals or options that allow you to minimise costs without impacting your business’s performance and options overly much.

However, be mindful not to cut marketing spending or communications capabilities which could cost you business in the long term.

Revisit Your Banking And Financial Products Needs

Look beyond your short-term needs and make sure that the interest rate on your business loans is competitive and weigh the benefits of variable and fixed rates.

Develop A Pricing Strategy

Rather than a price increase, look at ways you can leverage or bundle your existing goods and services.

If you are selling products, understand that there is a link between your client relationship and your pricing. Pricing too high all of a sudden could impact how your business is viewed by customers, but pricing too low will be detrimental to your business.

It could be cheaper for your business to offer a discount on upfront or prompt payments, rather than maintain an overdraft that accrues higher interest rates.

Consider Your Supply Chain

Overseas markets are volatile at the moment, so consider reducing risks by finding a domestic supplier which could also slash the costs of freight and storage. Create backup supply chains to mitigate the risk of having a ‘singular’ supply chain that could be impacted by market disruptions.

Review Your Workforce

The labour market is competitive, and you want to keep talented staff. Consider offering flexible work arrangements, offering nine-day fortnights rather than pay increases, and looking for training and development opportunities, particularly those that are subsidised by the government.

If an employee is not providing value to the business (such as working in a redundant position or failing to meet work expectations that are reasonable to expect from them), it may be better for the business to let them go.

Are you concerned about how inflation could impact your business? Speaking with a trusted business adviser (such as your accountant) may assuage some of those concerns, as they can provide you with a formulated plan that targets your business’s year ahead.

Ineligible downsizer contributions and how they are administered

When a downsizer contribution is ineligible, the fund must re-assess the amount in accordance with the Superannuation Industry (Supervision) Regulations 1994 and the trust deed. This is to determine if the amount can be retained as a non-concessional contribution.

Provided the trust deed allows so, the fund can return the contribution to the member or adjust the prior downsizing contributions to nil and report this amount as a non-concessional contribution when the member meets the age and work tests.

When a contribution can’t be returned or returned in full:
Members who no longer have a super interest with the fund, or an insufficient return amount, must have their contribution re-reported as non-concessional, even if the contribution was returned because the member did not meet the age/work tests. Some of the contributions may be an excess non-concessional contribution (ENCC). Regardless of the age of the member, if this is the case the member will receive an ENCC determination or when the fund can’t return the full amount. Members will continue to have access to all review rights under the ENCC scheme including:

  • Applying for a Commissioner’s Discretion if they have special circumstances; or
  • Lodging an objection to the ENCC determination.

Even if the member is in pension phase, the funds will still need to return an ineligible downsizer contribution if it cannot be accepted.

When a fund receives a release authority:
An amount released under these circumstances is treated as a super lump sum as it is a portion of the member’s super interest. Being in pension phase doesn’t prevent a fund from complying with the release authority although it may mean the full amount can’t be released, as the available balance may be lower than the amount stated in the release authority. Where the member’s available balance is lower than the release authority amount, the fund must release the maximum amount available.

The ATO monitors the rectification of this contribution reporting. Where funds don’t act within legislative timeframes, the Australian Prudential Regulation Authority (APRA) may be contacted.

Increasing workplace flexibility

Businesses now working from home can take the opportunity for employers to learn from the experience and consider new work structures coming out of COVID-19. This could mean increased flexibility for employees when it comes to working remotely. Here’s why you should consider flexible work arrangements with your employees.

Increase productivity

Flexible work arrangements can increase the productivity of employees by allowing them to work when they feel most motivated. Some people may naturally be more productive at night time and do their work then, which would not be possible with regular office hour restrictions. Remote work also saves time on excessive staff chatter and workplace distractions, such as ringing telephones and colleague drop-ins. Offering flexible work arrangements can show your employees that their lives are valued, which can lead to higher levels of performance and hard work to justify the flexible arrangements.

Reduced expenses

When employees are working from home more frequently, it means that your office doesn’t have to sustain as many people and you can reduce rent and utility expenses. This doesn’t mean that your employees have to pay too much more; the ATO has introduced an easier way of deducting work from home costs during the COVID-19 period called the ‘shortcut method.’ This allows employees to deduct 80c per hour they work from home to compensate for running expenses.

Attract talent

When your business exclusively depends on employees being physically present, it’s possible that you’re missing out on great workers who live too far or require more flexible arrangements. Modern job seekers are often on the lookout for positions that offer greater flexibility, rather than the regular 9 to 5 in the office. Highlighting workplace flexibility in your job advertisements can attract more prospective talent as physical barriers are eliminated.

Improved wellbeing

Remote work can improve the overall physical and mental wellbeing of your employees. One perk is that they may be able to be better rested and eat a proper breakfast in replacement of the morning commute. Work flexibility will also enable them to work around family commitments, which can boost their quality of life and happiness. This can raise morale and improve their quality of work by reducing the risks of fatigue and burnout.

Employee retention

Workplaces that allow employees to maintain a healthy work-life balance are more likely to retain their employees for long terms. This can benefit businesses by reducing the frequency of hiring and training periods, which can save a lot of m

Increasing website traffic and sales

Successful websites are those that get continual traffic, grab visitors’ attention and convert visits to sales. Businesses who utilise the following features on their website tend to attract more traffic and achieve noticeable returns from their online presence.

Mobile version:
Businesses need to ensure their customers’ mobile visits to the website are seamless as the majority of people now accessing the internet on portable devices rather than computers. Google values mobile-friendliness when ranking websites, providing another reason for businesses to ensure they have a mobile version of their site. As of January 2019, 40% of internet views were from a mobile phone and 10% were from a tablet. Making a website mobile-friendly allows customers to access from any location at any time.

Fast loading time:
Slow loading time often results in potential customers leaving before they look at content and what you are offering. Many free sites provide an opportunity for businesses to test their website’s speed. Elements such as image size, embedded videos, widgets/plugins and ads can all affect speed. Find out what needs to be fixed and make the necessary adjustments, as having pages that take too long to load remotely will drive customers away.

Email signup forms:
Having an email signup form gives businesses a way to collect visitor feedback and make connections. By receiving potential clients email addresses, you can engage them with promotions, announcements or newsletters. Businesses can easily embed a signup form on their website to collect email addresses and additional details from their customers.

Social media linking:
Make it easy for customers to follow you by adding social media buttons and icons to your website. Providing links to social media pages, such as Facebook or Twitter, allows customers to access various elements of a company that they showcase on different sites. This can help increase overall exposure, making it more likely that prospective customers will discover the business. Websites should make it easy for customers or followers to connect with a company through social media, as it can help people stay up to date and easily find out more about new services or products they might be interested in.

Further contact details:
To further connections with new customers, businesses can list their physical address and a contact number on a Contact Us page or at the bottom of their homepage. As some people prefer to talk directly rather than email, having this option allows communication from a wider range of prospective clients.

Increased cash flow support for businesses as COVID-19 continues

The Australian Government has increased support for businesses to manage cash flow challenges under the ongoing COVID-19 circumstances.

The Boosting Cash Flow for Employers measure announced on 12 March 2020 will be increased to provide up to $100,000 for eligible small and medium-sized businesses. To be eligible employers must have been established prior to 12 March 2020 and have an aggregated annual turnover of less than $50 million and employ workers.

The measure will provide employers with a payment equal to 100% of their salary and wages withheld. This is a rise from the original 50%, with maximum payments being increased from $25,000 to $50,000 and minimum payments being increased from $2,000 to $10,000.

Employers will receive payments from 28 April 2020 from the ATO as automatic credit in the activity statement system upon lodging eligible upcoming activity statements.

Eligible businesses will be provided with an additional payment during July – October 2020. The payment will be equal to the total amount received under the Boosting Cash Flow for Businesses scheme. For monthly and quarterly activity statement lodgers, these payments will be provided as automatic credit in the activity statement system for each lodgement up until October 2020.

The Government has also introduced the Coronavirus SME Guarantee Scheme to support the flow of credit for small and medium enterprises (SME) by providing a guarantee of 50% to participating SME lenders for new unsecured loans that will be used for working capital. To be eligible, SMEs will have a turnover of up to $50 million and the loans must comply with the following terms:

  • The loan is a maximum of $250,000 per borrower.
  • The loans will be up to three years, with an initial six month repayment holiday.
  • The loans will be in the form of unsecured finance.

The SME Guarantee Scheme will still require businesses to repay these loans and approval is subject to regular lending requirements. The Scheme will commence by early April 2020 and be available until 30 September 2020.

Incorporating eCommerce into your business

eCommerce is becoming an effective alternative to traditional face-to-face business operations and may be the change you need to make for your business’ long term growth.

eCommerce refers to the buying and selling of products and services online, either with business to business transactions or business to consumer transactions, and is a tool for small businesses to stay competitive amidst online shopping trends. If you have the ability to catalogue your products and services online and ship them to businesses and consumers, making the switch to eCommerce may be a good investment for the business’ direction in the long term.

To successfully incorporate eCommerce into your business, you must first research the different types of eCommerce to determine which one suits your business best. There are three major classifications to consider:

  • Business to Business (B2B): providing products from one business to another (e.g. software, furniture and supply).
  • Business to Consumer (B2c): exclusively online retailers.
  • Consumer to Consumer (C2C): consumers trade, buy and sell from each other in exchange for a small commission paid to your business.

After choosing which eCommerce model you’d like your business to adopt, you need to validate your products by performing market research. Establishing your niche and identifying who you are targeting will assist you in building your online marketing presence.

The next important step to incorporating eCommerce into your business is to finalise your eCommerce financial plan. As with any business venture, figure out your break-even point in unit sales and duration in both short term and long term. Decide how you want to invest your money into your transition into eCommerce (e.g. website design, software development, marketing) and project these expenses as well as your revenue. Having a budget to stick to will also help you maintain perspective and keep you grounded if things go wrong.

The last step is to execute your plans with a website. Build a website which is not only functional in selling your products, but also visually representative of your business. In the world of eCommerce, digital presentation is everything as you can no longer approach clients to face to face. Thus, make sure your brand is effectively reflected in your website design and interacts with your clients to reinforce online engagement.

Income Tax cuts in Federal Budget Benefiting high-income earners

In its efforts to boost the economy, the Federal Government is considering bringing the planned income tax cuts forward. The intention behind these cuts is to boost the economy by boosting consumption.

Initially, income tax cuts were to take place in three stages, the first of which has already been rolled out. The following stages aim to facilitate a reduction in tax for individuals earning from $90,000 to $200,000 over the next 4 years at the cost of billions of dollars to the Parliamentary Budget.

There has been criticism of the government’s suggestion that these stages be moved forward because they are unlikely to have the desired effect. Rather than boosting consumption, beneficiaries of this plan are likely to keep the additional money in the bank. This is because these plans are directed at high-income earners who will not need to spend the money on necessities, that low-income earners would.

Additionally, the uncertainty of the current climate which the government is relying on to justify this change may be the very reason that people save their money rather than spend it.

Critics of this change are suggesting that focus should be placed on ‘Social Spending’. An example of this could be an increase in pension – which pensioners are a lot more likely to reinvest into the economy.

Improving your social media content

Social media marketing is a powerful way to promote your business and establish a connection with your target market. Your content should closely relate to what you’re trying to sell or provide.

A key to great content is that it must be consistent and regularly updated. This is important because it will keep the business relevant in people’s news feeds.

Content does not have to be completely original work. It can be a combination of new content developed by the business, and content sourced from other platforms. Sharing other relevant social media posts through Retweeting or Reposting content can also be a great way to demonstrate your engagement with the community. However, do not forget to link back to the source that the content was taken from.

Another good idea is to ask questions or share a quote or tip. This will entice the audience to respond, share and join in the conversation.

Good content should be interesting, informative and engaging. It is a good idea to steer clear of technical jargon as the majority of people may not be able to understand. Remember who the target audience is and use language that will appeal to them.

While short text is the easiest content to produce, utilising visual elements such as images and videos can be an effective way of capturing an audience’s attention and are also able to deliver more information. It is also an opportunity to create links across social media sites that allow customers to click through to the website, or share videos and pictures onto their own news feeds.

Improving your LinkedIn presence as a business

Although other social media platforms can be more casual, having a strong LinkedIn presence can be helpful to form partnerships and onboard skilled team members. The steps to building an engaging and professional LinkedIn page for your business is straightforward but will require you to put time aside for it. 

  • Profile image and banner: Your logo should always be the profile image. You can play around with the image of your banner depending on your brand identity – it can be sleek and stylish or actionable and engaging. Make sure that both of these fit the sizing requirements listed in LinkedIn
  • About us: The About us section should not be too long or difficult to read. Keep it engaging, snappy and accessible. It should tell the reader who you are as a brand, where you are based, what you offer, what your values are, what your brand voice is, how people should contact you. Don’t forget to maintain professionalism as LinkedIn is a professional space.  
  • Fill out the key fields: Connect links to your social media/website, add your address, details of your industry, company size. Filling out all of these will help LinkedIn show your page in response to relevant searches and make you more discoverable.
  • Create showcase pages: Your main page will give people an overview of the business, but if you have multiple services, then creating showcase pages will help zoom in on day-to-day activities of each service. This will help people engage with the aspect of your business that is most relevant to them. 

Improving your FAQ page

Including a Frequently Asked Questions (FAQ) page on a website can be a great time saver for businesses who deal with repeatedly asked questions from customers and clients. The best approach to optimise these pages correctly is to pay closer attention to the customer’s experience with the business and ensure the page is prominent on the website.

Talk to customers about their questions:
Before you write your page, you first need to find out what your customers actually want to know. For a business to understand and include the questions and answers customers want to see on a FAQ page, the business needs to ask its customers. To receive this information directly, a business can ask customers in-store, indirectly via an online survey or talk to those who work in the customer service side or business’s sales team.

Identify keywords and patterns:
The keywords on a business’s FAQ page need to support the questions customers want to be answered, just as customer questions should support the page’s keywords. If you have a number of customer questions regarding your returns policy, include words such as ‘returns or’ ‘reshipping fees’ on the FAQ page. When determining what keywords to include, more information is always best. Grouping similar questions together, with large headlines for each category, can help in presenting the information in an easily understood, systematic matter.

Don’t forget to update your FAQ:
Once a business publishes questions to their FAQ page, it is important to conduct further research into whether or not customer questions were answered accurately online. Using the information gathered from talking to customers and employees, a business will know if their FAQ page contains the right questions and answers, or if it still needs improvement. Customer trends can change so it is important that a business updates its content to ensure it continues to answer customers questions correctly. If the information is outdated or not relevant, it can’t help customers so remembering to remove the questions that aren’t relevant will help customers to receive answers to any concerns they have without having to look through things that are irrelevant.